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Bernanke expects economy to rebound in months ahead

WASHINGTON - Federal Reserve Chairman Ben Bernanke predicted Tuesday the economy will rebound from its anemic start of the year even if the housing slump persists. Wall Street slid, taking the news as a sign the Fed won't lower interest rates.

Economic growth in the year's first three months nearly stalled, logging just a 0.6 percent pace. It was the worst quarterly showing in more than four years.

However, Bernanke said he believes some forces that figured prominently in that poor performance - including a bloated trade deficit, cutbacks by businesses in inventory investment and weak federal defense spending - ''seem likely to be at least partially reversed in the near term.''

Bernanke made his comments via satellite to an international monetary conference in Cape Town, South Africa. In his talk, he stuck to the Fed's forecast that the economy in coming quarters will advance ''at a moderate pace, close to or slightly below the economy's trend rate of expansion.'' A copy of his prepared remarks was made available in Washington.

Some economists put the economy's trend, or normal growth rate, at around 3 percent to 3.25 percent.